Training and Development - The GE Way

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Case Details:

Case Code : HROB072
Case Length : 18 Pages
Period : 1981-05
Pub Date : 2005
Teaching Note : Available
Organization : General Electric Company
Industry : Diversified
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Analysts acknowledged the fact that GE went far beyond imparting traditional training. It 'nurtured talent' to bring out the latent potential in its employees through proper grooming.

The Work-Out Program that GE developed to train its employees created such an impact that later other companies began to approach GE to try and develop similar programs for their employees. GE businesses like GE Consumer and Industrial were certified by professional associations as authorized providers of education and training for their respective areas of expertise. GE spent around $1 billion on in-house Training and Development (T&D) every year. In addition, GE invested over $38 million annually for reimbursement of tuition fees for employees who enrolled for outside degree programs.

GE was chosen as the best company for executive development in a survey conducted by Executive Development Associates8 for the year 2005 (Refer Exhibit II).

T&D Initiatives at GE

World's First Corporate University

Although on-the-job-training had been used at GE since the 1920s, formal corporate training took shape during Ralph Cordiner9 (Cordiner)'s tenure as CEO. On taking up this position in 1950, Cordiner started restructuring the company, decentralizing it by breaking it up into various departments.

He felt decentralization would make the company more manageable in times of rapid growth. As a result of decentralization, GE had more than 100 divisions where earlier there were just eight major units. A general manager was appointed for each division, to oversee the division's overall working.

As a result of the decentralized structure, the company faced another challenge. The new breed of managers needed to be trained to enable them to handle their divisions successfully. Therefore, establishment of a corporate training center for GE executives became the logical next step.

Cordiner had envisioned a radically new approach to train executives for complex management responsibilities. To make this a reality, he sent a team of executives to look at business schools and universities around the world. However, the team found that none of these schools would be able to meet their requirements.

So, finally, Cordiner decided that GE would establish its own facility. The management development center was set up in the year 1956, at Crotonville10, in the village of Ossining, New York. It was the world's first corporate university and a major milestone in the area of T&D for the company...

Excerpts >>

8] Executive Development Associates is a global executive development firm based at San Francisco, US. It conducts the survey annually to recognize companies for their strategies and programs aimed at cultivating the next generation of business leaders. Chief learning officers and human resources executives of more than 75 companies vote to choose the top companies for the survey.

9] Ralph Cordiner was CEO from 1950 to 1964.

10] The formal name of the place is Croton-on -Hudson, as it is situated near the river Hudson.


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